STRATEGIC PRIORITY: Growing
AGENDA DATE: May 28, 2025
COUNCIL DISTRICT(S): 1
DEPARTMENT: Department of Housing and Community Development
EXECUTIVE: Robin Bentley
______________________________________________________________________
SUBJECT
Title
Authorize (1) the approval of the City Council of the City of Dallas, acting as the applicable elected representative as defined by Section 147(f)(2)(E) of the Internal Revenue Code of 1986, as amended (Code), of the issuance of multifamily residential mortgage revenue bonds (Bonds) by the City of Dallas Housing Finance Corporation (DHFC or Issuer) in one or more series of tax-exempt bonds in an amount not to exceed $35,000,000.00; proceeds of the Bonds will be loaned to Generation Housing Partners, LLC or its affiliate, TX Illinois 2024, Ltd., (collectively referred to as the Borrower) to finance a portion of the cost of the construction of units for an affordable multifamily complex to be known as HiLine at Illinois (Project) on real property located at 4710 West Illinois Avenue, Dallas, Texas 75211 (Property); (2) the approval of the application of the Texas Housing Finance Corporations Act, Chapter 394, Local Government Code (Act), to the Property and the use of proceeds of the Bonds issued by the DHFC pursuant to the Act to finance and construct the Project; (3) the City Manager to negotiate and execute a development loan agreement and security documents with the DHFC or affiliate(s) thereof in an amount not to exceed $3,970,000.00 in Community Development Block Grant (CDBG) Funds to purchase and own the Property; and (4) the City Manager to negotiate and execute a development loan agreement and security documents with the Borrower in an amount not to exceed $2,980,000.00 in HOME Investment Partnership Program (HOME) Funds and $3,970,000.00 in CDBG Funds in the form of a loan assigned by an affiliate of the DHFC (the total award not to exceed $6,950,000.00), conditioned upon Borrower, or the entity named by the award, receiving 2023 4% Housing Tax Credit award or other funding source subject to approval of the City for the development of the Project; and (5) pursuant to the City’s rights under DHFC bylaws, approve the DHFC to acquire through its affiliate, the Property and to enter into a long-term ground lease with Borrower for the lease of the Property, pursuant to 24 CFR 570.201(a) and (b), and development of the Project, subject to compliance with all funding source requirements - Not to exceed $6,950,000.00 - Financing: HOME Funds ($2,980,000.00), and Community Development Block Grant Funds ($3,970,000.00)
Body
BACKGROUND
Generation Housing Partners, LLC (GHP) submitted a proposal in response to the City’s Notice of Funding Availability (NOFA), as amended, to receive gap financing in the form of a cash flow loan to support the construction of a 200-unit multifamily housing complex known as HiLine at Illinois. The NOFA was issued by the Department of Housing and Community Development (Housing) in accordance with the City’s Comprehensive Housing Policy (CHP), as restated in the Dallas Housing Policy 2033 (DHP33) and Dallas Housing Resource Catalog (DHRC).
The Housing Department administers programs to appropriately incentivize private investment for the development of quality, sustainable housing that is affordable to the residents of the City. Specifically, Housing administers the New Construction and Substantial Rehabilitation Program, which where necessary, seeks to provide financial assistance to new developments or substantial rehabilitation of existing developments. All projects seeking financial assistance are required to submit a Notice of Intent to apply for financial assistance through NOFA to develop affordable homeownership and rental housing. As outlined in the NOFA, multiple sources of funding are available. However, proposed projects must meet specific thresholds to qualify for the use of a specific funding source.
The NOFA scorecard criteria for multi-family rental developments include the following:
|
Scoring Criteria |
Maximum Points |
Awarded Points |
|
Project Attributes |
21 |
18 |
|
Equity & City Initiatives |
40 |
9 |
|
Readiness |
53 |
53 |
|
Developer Experience and Capacity |
27 |
27 |
|
Bonus Points |
28 |
16 |
|
Penalty for Nonperforming Previously Funded Projects |
-10 |
0 |
|
Total |
169 |
123 |
The proposed HiLine at Illinois Project received a fundable score of 123 of 169 points. The requested City funds, if approved, will cover the gap in financing created by recent market conditions, increased construction costs, and will stabilize the viability and economics of the development.
On September 12, 2023, the DHFC Board of Directors adopted a resolution declaring its intent to issue bonds to finance a portion of the Project and authorized the filing of an application for allocation of private activity bonds with the Texas Bond Review Board. Since the Project is located within the city of Dallas, Section 147 (f) of the Code requires that in order for the Bonds to be tax-exempt, the City Council, the applicable elected representative of the City of Dallas, must approve the issuance of the Bonds by the Issuer after a public hearing following reasonable public notice of the proposed Bond issuance. Approval of the City is for the sole purpose of satisfying the conditions and requirements of Section 147(f) of the Code and is not to be construed as an undertaking by the City. The Bonds are not issued by, or on behalf of, the City. The Bonds shall not be a debt, liability, or an obligation of the City nor shall any of the City’s assets be pledged to pay the Bonds. The City’s name will not appear on the Bonds. The Bonds shall specifically provide that the Bonds are not a debt of the City of Dallas, Dallas County, or the State of Texas and that the City of Dallas, Dallas County, and State of Texas are not liable with respect to the Bonds. The City is not responsible for the payment of the Bond obligations nor to fulfill DHFC’s authority under any documents related to the Project.
The Tax Equity and Fiscal Responsibility Act (TEFRA) hearing notice was published in the Dallas Morning News on March 31, 2025. On April 7, 2025, the public hearing was held. Under applicable federal income tax law, the TEFRA approval is only valid for a one-year term. It is anticipated that the Bonds will close on or about June 26th, 2025. The Act requires that the City of Dallas approve the issuance of Bonds by the DHFC to finance the construction and development of the Project.
The Borrower is a Texas-based developer, owner, and asset manager of Class A multi-family assets throughout the southwest. As a long-term owner, GHP has been involved in the development, construction, and management of over 4,000 units with a capitalization value of approximately $385,000,000.00. The units include multi-story apartment properties for families, seniors, senior cottages, rehabilitation, and adaptive reuse developments. GHP has partnered with the DHFC in multiple other projects including Estates at Shiloh and Westmoreland Station. GHP intends to use Asset Living Property Management has been in the residential property business for 36 years and has developed approximately 20,000 units and currently manages over 24,000 units.
TX Illinois 2024, Ltd., a Texas limited partnership, includes: (i) as general partner, TX Illinois 2024 GP, LLC, a single asset entity solely owned by the DHFC; (ii) As special limited partner, an affiliate of TX Illinois 2024 SLP; (iii) the tax credit equity investor as investor member once a tax credit equity investor is identified, to be added through an amended and restated agreement of limited partnership; and (iv) Applicant, as administrative partner unless an alternative method of participation by the Applicant is agreed to by the partners under the an executed partnership agreement
The DHFC or its affiliate(s) will acquire the Property and subsequently enter into a 99-year ground lease with TX Illinois 2024, Ltd. City loan funds will be used to acquire and develop the Property. The Applicant proposes to construct a mixed-income residential development of 200 units on 6.55 acres. The units will be comprised of 40 one-bedroom, 100 two-bedroom, and 60 three-bedroom units. The Project will be a four-story wrap construction product. The units will be equipped with large balconies, personal storage, granite countertops, Energy Star Appliances, and other Class-A features. The Property also has a resort-style swimming pool, children’s playscape, and sports court, clubhouse, leasing center, furnished fitness center, community lounge, and business center. The community will offer laptops to its residents for “check-out” to do schoolwork, tax-preparation, budgeting and/or life-planning, or for simple everyday needs. Lighted public sidewalks will be built along both West Illinois Avenue and Knoxville Street, enhanced with lush landscaping and street trees.
The Borrower will work with the Office of Emergency Management and Crisis Response for security input/upgrades, community activities, and incorporate best practices of Crime Prevention Through Environmental Design. Additionally, the Borrower will provide modern security features to include a full camera system, controlled access, a community crime watch program, and participation in National Night Out to ensure a safe living environment for all residents and staff.
HiLine Illinois is conveniently situated within a mile of three DISD schools, multiple City parks, and directly across the street from the Dallas College Mountainview Campus. It is also located along a high frequency Dallas Area Rapid Transit (DART) bus route and will conveniently provide a DART shelter accessible to all its residents.
The City’s NOFA, as amended, allows for Special Initiatives/Projects which include developments on City-owned land; any development projects with partners such as Dallas Area Rapid Transit, Dallas Independent School District (DISD), Dallas Housing Authority (DHA); applicants where churches/religious institutions, colleges/institutions of higher learning with ownership interests, are partnering with developers for development projects. Additional Special Initiatives/Projects may be identified by the Director of the Department of Housing & Community Development. The proposed Project will partner with Mountain View College to qualify as a Special Initiative Project.
The unit mix and rental rates are as follows:
|
Unit Type |
AMI |
Units |
Rent |
|
1BR |
30% |
6 |
$ 555.44 |
|
1BR |
50% |
4 |
$ 969.06 |
|
1BR |
60% |
24 |
$1,175.88 |
|
1BR |
70% |
6 |
$1,382.69 |
|
2BR |
30% |
9 |
$ 672.53 |
|
2BR |
50% |
10 |
$1,168.88 |
|
2BR |
60% |
60 |
$1,417.05 |
|
2BR |
70% |
21 |
$1,665.23 |
|
3BR |
30% |
7 |
$ 780.34 |
|
3BR |
50% |
6 |
$1,353.90 |
|
3BR |
60% |
36 |
$1,640.68 |
|
3BR |
70% |
11 |
$1,927.46 |
Total development costs are anticipated to be approximately $70,074,941.00 which includes the acquisition price for the land. The hard cost construction budget is anticipated to be $41,897,867.00 which is $209,489.33 per unit.
The anticipated financing sources and uses are as follows:
|
Proposed Financing Sources |
Amount |
|
Permanent Loan |
$ 25,528,834.00 |
|
Tax Credit Equity |
$ 33,137,434.00 |
|
City of Dallas HOME Loan |
$ 2,980,000.00 |
|
City of Dallas CDBG Loan |
$ 3,970,000.00 |
|
Deferred Developer Fee |
$ 4,458,673.00 |
|
Total |
$ 70,074,941.00 |
|
Proposed Uses |
Costs |
|
Acquisition |
$ 3,970,000.00 |
|
Hard Construction Costs |
$ 41,897,867.00 |
|
Soft Costs & Financing Fees |
$ 15,556,331.00 |
|
Developer Fees |
$ 7,275,000.00 |
|
Reserves |
$ 1,375,743.00 |
|
Total |
$ 70,074,941.00 |
CDBG funds will be used for acquisition of the Property and HOME funds will be used for vertical construction costs of the Project such as framing, roofing, carpentry, and other eligible costs, as allowed by applicable federal regulations governing the use of the funds. All funds will be provided on a reimbursable basis.
After the Project is complete, 22 of the 200 units to be made available to households earning 0.00%-30.00% Area Median lncome (AMI), 20 of the 200 units to households earning 31.00% - 50.00% AMI, 120 of the 200 units to households earning 51.00% - 60.00% AMI, and 38 of the 200 units to households earning 61.00% - 70.00% AMI. CDBG Funds require 51.00% of the total number of units or 102 units be reserved for households earning at or below 80.00% AMI. A subset of these affordable units will be counted as HOME-assisted units as well. All CDBG and HOME-assisted units must remain affordable for a minimum of 20 years secured by a restrictive covenant as required by the DHRC and federal guidelines to ensure long-term affordability.
The Project has been found to affirmatively further fair housing by the City’s Office of Equity and Inclusion Fair Housing Division. Housing staff recommends approval of this item as it furthers the mixed-income housing goals of the DHP33 and the Housing Action Plan, meets the threshold requirements of the NOFA, and the financial gap has been confirmed by third-party underwriting.
Staff confirmed that this Project would not be feasible but for the City’s participation and that the Project furthers the goals of the DHP33. Staff recommends approval of this item to allow this mixed-income housing development to move forward.
ESTIMATED SCHEDULE OF PROJECT
Begin Construction August 2025
Complete Construction April 2027
PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS)
On September 12, 2023, the DHFC authorized an inducement in an amount not to exceed $35,000,000.00.
On February 14, 2024, the City Council held a public hearing and following, adopted a Resolution of No Objection related to the Development and Developer’s 4% Non-Competitive Low Income Housing Tax Credits application to TDHCA by Resolution No. 24-0289.
The Housing and Homelessness Solutions Committee was briefed by memorandum regarding this item on May 21, 2024.
The Housing and Homelessness Solutions was briefed by memorandum regarding this matter on April 22, 2025. <https://dallascityhall.com/government/citymanager/Documents/Council%20Materials/HilineIllinois_HHS%20Briefing%20Memo%20V2%20redline%20by%20DWade%204.8.25%20CLEANED%20(1).pdf>
FISCAL INFORMATION
|
Fund |
FY 2025 |
FY 2026 |
Future Years |
|
Community Development Block Grant Fund |
$3,970,000.00 |
$0.00 |
$0.00 |
|
HOME Investment Partnerships Fund |
$2,980,000.00 |
$0.00 |
$0.00 |
|
Total |
$6,950,000.00 |
$0.00 |
$0.00 |
M/WBE INFORMATION
In accordance with the City’s Business Inclusion and Development Policy adopted on September 23, 2020, by Resolution No. 20-1430, as amended, the M/WBE participation on this contract is as follows:
|
Contract Amount |
Procurement Category |
M/WBE Goal |
|
$6,950,880.00 |
Construction |
32.00% |
|
M/WBE Subcontracting % |
M/WBE Overall % |
M/WBE Overall Participation $ |
|
32.00% |
32.00% |
$2,224,000.00 |
|
• This contract meets the M/WBE goal. |
|
• Generation Housing Partners, LLC - Local; Workforce - 100.00% Local |
OWNER/EXECUTIVE
Generation Housing Partners, LLC
Adrian Iglesias, President
MAP
Attached